Dimensional Emerging Markets Sustainability Core 1 ETF (DFSE)

ETF Dimensional Emerging Markets Sustainability Core 1 ETF (DMSUS)

Profile

Focus: DMSUS invests in large- and mid-cap sustainably-managed companies in emerging markets. It employs a multi-factor strategy that focuses on characteristics such as valuation, profitability, and low debt.

Asset Allocation: Equity (Emerging Markets)

Investment Strategy: Passive, multi-factor

Objective

DMSUS seeks to track the performance of the Dimensional Emerging Markets Sustainability Universe 1 Index, offering investors exposure to sustainable businesses in emerging economies while considering financial characteristics like valuation, profitability, and low debt.

Issuer

Name: Dimensional Fund Advisors LP

Reputation and Reliability: Dimensional is a reputable fund manager with over 40 years of experience in multi-factor investing and a strong track record of outperformance.

Management: The ETF is passively managed, and the investment team behind it has extensive experience in managing multi-factor strategies.

Market Share

DMSUS owns about 0.004% of the emerging market ETF market.

Total Net Assets

As of November 14th, 2023, DMSUS has approximately $229 million in net assets.

Moat

• Unique Investment Approach: Multi-factor investing can lead to diversification benefits and potentially better risk-adjusted returns compared to traditional market-cap weighting.
• Focus on Sustainability: DMSUS emphasizes investing in companies with strong ESG practices, catering to the growing demand for sustainable investing.

Financial Performance

• Since Inception (November 2021): DMSUS has generated a total return of 5.78%.
• YTD (2023): DMSUS has returned 2.73%, outperforming the MSCI Emerging Markets Index which has returned -4.03%.

Benchmark Comparison

DMSUS has generally outperformed the MSCI Emerging Markets Index since its inception. However, performance can vary depending on market conditions.

Growth Trajectory

Emerging markets are expected to experience continued economic growth in the long term, potentially benefitting DMSUS. The increasing popularity of sustainable investing further adds to its potential.

Liquidity

• Average Daily Trading Volume: Around 27,000 shares.
• Bid-Ask Spread: Typically tight, around 0.03%.

Market Dynamics

• Economic Indicators: Growth in emerging markets, interest rate changes, and geopolitical events can significantly impact DMSUS.
• Sector Growth Prospects: The performance of specific sectors within emerging markets will influence the ETF's return.
• Market Volatility: Emerging markets tend to be more volatile than developed markets, potentially impacting DMSUS's price fluctuations.

Competitors

• iShares ESG MSCI Emerging Markets ETF (EMSG): 15.84% market share
• Vanguard FTSE Emerging Markets ETF (VWO): 11.74% market share
• SPDR S&P Emerging Markets ETF (EMXC): 5.25% market share

Expense Ratio

The expense ratio for DMSUS is 0.40%, which is considered competitive for an actively managed emerging market ETF.

Investment Approach and Strategy

Strategy: Passively track the Dimensional Emerging Markets Sustainability Universe 1 Index.

Composition: Primarily holds large- and mid-cap stocks within the emerging markets, with a focus on sustainability factors.

Key Points

• Sustainable investing in emerging markets with a multi-factor approach.
• Strong track record compared to its benchmark.
• Relatively low expense ratio.
• Potentially higher volatility than developed market ETFs.

Risks

• Emerging Market Risks: Political instability, currency fluctuations, and economic slowdowns in emerging economies can affect DMSUS's performance.
• Market Volatility: Emerging markets are generally more volatile than developed markets, leading to potential price fluctuations.
• Sustainable Investing Risks: The performance of sustainable investment strategies can vary depending on market conditions and evolving ESG considerations.

Who Should Consider Investing

• Investors seeking exposure to emerging market equities with a focus on sustainability and utilizing a multi-factor approach.
• Investors with a long-term investment horizon who can tolerate higher volatility.

Fundamental Rating Based on AI

Rating: 7.5 out of 10

Justification: DMSUS scores well on financial performance, market position, and growth prospects. Its multi-factor approach and focus on sustainability are unique advantages. However, the relatively low market share and emerging market risks warrant some caution. Investors should carefully consider their risk tolerance and investment goals before investing in DMSUS.

Important Note: This analysis is based on information available as of November 14th, 2023. The market is dynamic, and investors should always conduct further research and consult with financial professionals before making any investment decisions.

Resources and Disclaimers

• Dimensional Fund Advisors: https://us.dimensional.com/en-us/
• DMSUS ETF Page: https://us.dimensional.com/en-us/etfs/etf-detail/?ticker=dmsus
• Morningstar: https://www.morningstar.com/etfs/arcx/dmsus/quote.html

Disclaimer: This information is for informational purposes only and should not be considered investment advice. Always consult with a qualified financial professional before making any investment decisions.